AOL is making a big bet on online video, committing up to $96.7 million to acquire European video distribution network GoViral. The acquisition will give AOL a bigger presence in Europe, as GoViral has offices in the UK, Germany, France, Denmark, Sweden and Spain, and plans further expansion.
The GoViral acquisition is part of AOL’s attempt to transform itself from a provider of Internet access to a media firm. Video has been at the heart of that transformation, with AOL already investing heavily to acquire video startups StudioNow and 5min. AOL spent $74.1 million upfront for GoViral, with another $22.6 million being deferred and paid over two years following the close of the deal.
Late last year, AOL redesigned its home page to highlight more video from its own properties, as well as those from content partners. The company also appointed 5min CEO Ran Harnevo as senior vice president of AOL Video.
AOL said in its press release that GoViral’s content distribution network has more than 18,000 publishers in 24 verticals, with a reach of more than 350 million viewers and 60 million-plus views each month. The company is looking to leverage that volume and audience to expand its existing video offerings. AOL no doubt is also hoping that brands like Nike, LG, Unilever, Paramount, Nokia, Hyundai/Kia, Audi, Nintendo and Gucci — all of which have delivered campaigns through GoViral’s distribution network in the past — will stick around.
AOL is sinking huge amounts of money in online video and its hyperlocal Patch content, but ad revenues have yet to catch up to all that investment. In fact, its ad revenues declined by 27 percent in the third quarter last year. The focus on video could potentially slow some of those ad declines, as video CPMs — particularly premium video CPMs — tend to be more resilient than display advertising. AOL reports fourth-quarter and full-year earnings on Wednesday, which will include a full quarter with 5min’s results included. We’ll see then if AOL’s acquisitive video strategy is starting to pay off.
Related content on GigaOM Pro: (subscription required)
- Three Reasons Hulu Plus is No Threat to Netflix
- Cord-cutting? Hold the Phone
- Pay-TV’s Ala Carte Tipping Point